ALJDEC decisions subject to certification as final

2013A-4321-ROC-rf · Registrar of Contractors · 2015-07-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 23, 2015 APPEARANCES: Complainant was represented by Michael J. Gordon. Respondent did not appear. The Registrar of Contractors was represented by Assistant Attorney General Seth T. Hargraves. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ Complainant challenges a proposed payout by the Residential Contractors’ Recovery Fund (“the Fund”). The Fund has issued notice that it intends to make a payout to Complainant for the amount of $2,675.05. Complainant requested a hearing, challenging the proposed payout amount as too low. Based upon the record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order for payout in the amount of $15,860.00. FINDINGS OF FACT 1. Respondent was the holder of License No. B-135450-R issued by the Registrar of Contractors (the Registrar). 2. On or about June 1, 2011, Complainant entered into a contract with Respondent to install a new roof at her residence. Respondent completed work on the project on or about September 14, 2011. 3. On or about August 14, 2013, Complainant filed a complaint alleging poor workmanship by Respondent. Upon investigation, the Registrar issued a Corrective Work Order, on or about November 25, 2013, in which the following items were noted: - The drip edge was not installed under the felt underlayment at eaves and needs to be corrected. - The starter course was not installed correctly and needs to be corrected. - The flashing drip edge at roof over closet needs to be redone properly and any leaks need to be corrected.

4. Respondent did not complete the work required in the Corrective Work Order. 5. On or about June 26, 2014, Respondent’s license was revoked after a default finding of poor workmanship and failure to comply with a directive from the Registrar by Respondent in relation to Complainant’s complaint. 6. Complainant made a claim to the Fund on August 18, 2014. With the claim, Complainant submitted two bids from licensed contractors for the installation of a new roof. The bid from Lizotte Roofing LLC, License Nos. 264860 and 271275, totaled $15,860.00. The bid from Dos Tortugas LLC, License No. 197081, totaled $20,345.21. A third bid was also submitted that did not include the name of the contractor, but listed License Nos. 032999 and 079271, and totaled $19,744.00. 7. After reviewing the claim, on or about September 14, 2014, the Registrar requested that Complainant submit three bids to repair only the three items that were included in the Corrective Work Order issued on November 25, 2013. 8. Complainant responded to the request stating that the three items in the Corrective Work Order could not be completed without affecting the integrity of the entire roof. 9. On or about February 2, 2015, Tom Sandoval, a Registrar Investigator, completed a jobsite inspection. Following the inspection, Investigator Sandoval reported that a total of 349 lineal feet of eave needed to be repaired for the drip edge and starter course. Investigator Sandoval indicated that two feet up all around should be included “just in case more needs to be taken off” resulting in a total of 698 square feet needing to be corrected. Investigator Sandoval also noted the “front entrance drip edge used at both sides instead of flashing needs to be repaired” and there was “flashing needed at the front entry foyer” together totaling approximately 54 square feet. 10. On or about February 24, 2015, Complainant submitted a statement from Versatile Roofing, License Nos. B138549 and 194202, which provided as follows: It is my opinion that this scope of work extends too much liability to any repair effort since the issues on this roof such as extensive loss of granules, side wall flashings and penetration flashing causing leaks, as well as improper valley systems are totally ignored by the ROC. It is an embarrassment to realize that when I say use a contractor who’s licensed because you’re protected by the ROC[,] I am misleading the public. The ROC is obviously protecting their own costs and liability and no legitimate contractor should participate in this sham. This Roof needs to be torn off and replaced!!!

11. Based on Investigator Sandoval’s findings, the Fund estimated the cost to repair only the three items included in the November 25, 2013 Corrective Work Order. The Fund determined that Complainant was eligible for payout from the Fund in the amount of $2,675.05. 12. Complainant objected to the proposed payout. Complainant testified at the hearing that the three licensed contractors who provided bids refused to do the scope of work outlined in the November 25, 2013 Corrective Work Order because the work cannot be done without damaging the rest of the roof or performing the work as detailed would open the contractor to excessive liability for any future problems with the existing roof. 13. Complainant also presented the testimony of Michael Lizotte of Lizotte Roofing LLC who had been assisting her with the Registrar’s process. Mr. Lizotte testified that his company would not perform the work based on what he called a conflict of interest. Mr. Lizotte stated he had been on Complainant’s roof approximately seven times to inspect the roof, take photographs, and help prevent further leaks. Mr. Lizotte indicated that over time, the shingles installed would become attached to the shingles above and below. Mr. Lizotte testified that in some areas, he was able to get the shingles apart without difficulty, but in a lot of areas, he could not separate the shingles without damaging the shingles above. Being unable to separate most of the shingles without damage, Mr. Lizotte concluded that it would be impossible to complete the repair as the Registrar had indicated. Mr. Lizotte acknowledged that the Registrar’s approach could be implemented when the shingles could be separated without damage. 14. Investigator Sandoval testified that he did not believe the entire roof needed to replaced and that it could still be repaired. Investigator Sandoval stated that Mr. Lizotte had wanted to replace the roof from the beginning. Investigator Sandoval acknowledged that he did not check to see if the tiles could be separated without damage, but stated that he saw Mr. Lizotte separate tiles in one location without difficulty. 15. Eric Ulinger, Supervisor for the Fund, testified that because the November 25, 2013 Corrective Work Order addressed only three violations, the Fund was only responsible to pay for those three violations to be repaired. Mr. Ulinger maintained that Complainant’s claim was initially denied because Complainant failed to provide three estimates for the scope of work outlined, but then an award was calculated using the Xactimate program used by insurance adjusters to determine a fair amount. Mr. Ulinger acknowledged that he had never been to Complainant’s home to inspect the roof. Mr. Ulinger stated that if one had to damage other parts of the roof to correct the three items listed, that would not be fixing the work by appropriate means. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the person who brings the action. Utah Construction Company v. Berg et al., 68 Ariz. 285, 205 P.2d 367 (1949); A.A.C. R2-19- 119(B). Further, the standard of proof at hearing is by preponderance of the evidence. Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); A.A.C. R2- 19-119(A). The Notice of Claim for Administrative Payout states that Complainant bears the burden of proof to show entitlement to any amount other than that in the Notice. Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that the proposed payout amount is not reasonable and proper. 2. Complainant is an injured person within the definition in A.R.S. § 32-1131(3) and is, therefore, entitled to recovery from the Fund. 3. According to A.R.S. § 32-1132(A), an award from the Fund is limited to “actual damages suffered by the complainant as a direct result of the contractor’s violation . . .,” not to exceed the cost of repair or replacement. “Actual damages” are those that will put the injured party in the position in which he was before he was injured. United States Fidelity & Guaranty Co. v. Davis, 3 Ariz. App. 259, 263, 413 P.2d 590, 594 (1966). 4. Under the facts and circumstances of this case, the Fund is empowered to determine and award, based on actual damages, an appropriate payment to Complainant pursuant to A.R.S. § 32-1132 and A.R.S. § 32-1154(F). 5. The weight of the evidence established that most of the shingles could not be separated from the ones above it without damaging the remaining shingles. Mr. Lizotte, an experienced roofer, was the only witness to testify that he had attempted to separate the shingles in multiple locations throughout the roof and found most of them not able to be successfully separated. Because the limited approach required by the Fund is not possible without damaging the remaining roof shingles, Complainant’s payout from the Fund cannot be limited to repairing only those three items. 6. The evidence of record supports an award to Complainant in the amount of the lowest bid submitted, $15,860.00, all of which shall be chargeable against Respondent and persons on the license as set forth in A.R.S. § 32-1139(B). RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors make payment from the Residential Contractors’ Recovery Fund to Complainant in the amount of $15,860.00. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Decision will be 40 days from the date of that certification. Done this day, July 13, 2015.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826